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We’re re-posting this 2010 blog entry from Jed Carlson, Co-Founder of ReverbNation, because it was incredibly well-received by readers — and it contains timeless advice for artists from all walks of life. Enjoy!

I was on a recent panel in Memphis, TN, for The Recording Academy called “Grammy GPS: A Roadmap for Today’s Music Business.” The topic of my panel was Direct-to-Fan (DTF) commerce. In preparation, I pored over data (anecdotal and empirical) from the last 3+ years of working with Artists, Labels and Managers, including recent data from our online DTF product Reverb Store that launched in January of this year.

The first thing that dawned on me was how much DTF commerce is already taking place, offline, in the form of the ubiquitous merch table at virtually every concert on the planet. The Artist Revenue Survey we conducted in 2008 revealed that more than 50% of our Artists total revenue came from playing live shows and selling merch and music at those shows.

It seems logical that we should consider the principals behind the merch table (offline DTF) if we’re going to be properly equipped to maximize DTF online. Core to that is understanding why fans buy products.

The following illustration is an attempt to visualize four types of fans that buy for different reasons. Any given Artist may have fans in any or all of the buckets, depending on where they are at in their career. You’ll notice that I added a ‘value’ arrow that increases as you go up the illustration. This value arrow is based on a combination of the price each type of fan is willing to pay multiplied by the number of potential fans in each group. Your biggest supporters are willing to pay more than some of the other groups, but there will likely be fewer of them, especially as you tour farther from home: